“Eventually Congress will recognize that all the changes enacted to address the overblown patent troll issue has resulted in far more damage to U.S. competitiveness… In the interim, inventors and U.S. companies need to re-evaluate their IP protection strategy.”
In a recent article that was first published in The Hill, I stated that American innovators have paid a heavy price for shortsighted sweeping changes made to address abusive patent litigation. To move its agenda for the last 12 years, the anti-patent lobby has dehumanized patent owners by labeled them “patent trolls” who contributed nothing to society. They created a compelling narrative that these trolls were extorting huge sums of money from hard working U.S. companies, including main-street mom and pop businesses, and that their actions threatened the very fabric of the nation’s economy. This got Congress’ bipartisan attention to “save U.S. businesses from extortionists.”
I was not ignoring that abusive patent litigation was a problem but believe the “reform” far exceeded what was necessary to address the limited problem. The cumulative result of all the anti-patent changes led the U.S. Chamber of Commerce to recently rank the U.S. patent system 10th in the world. Eventually Congress will recognize that all the changes enacted to address the overblown patent troll issue has resulted in far more damage to U.S. competitiveness. This revelation, unfortunately, will take time as the old patent troll narrative is still being cited on the Hill. Senators Chris Coons (D-Del.), Tom Cotton (R-Ark.), Dick Durbin (D-Ill.) and Mazie Hirono (D-Hawaii) have taken a bold step and acknowledge the need for improvements and recently introduced the STRONGER Patents Act (S.1390) to make some much needed repairs to the U.S. patent system. The STRONGER Patents Act is not perfect but it contains many good ideas to begin healing the U.S. patent system.
In the interim, inventors and U.S. companies need to re-evaluate their IP protection strategy. The following recommendations are some ways to hedge against the continued degradation of the U.S. patent system.
1. Re-evaluate your international strategy
Consider foreign jurisdictions as a strategic alternative to U.S. protection. This is not a recommendation to stop seeking all U.S. patents but an acknowledgement that the U.S. has slipped as a global leader of IP protection. For example, software related inventions, that are necessary for every innovative company, currently enjoy stronger protection in China and Europe than the U.S. Future changes in Europe, such as a unified patent court, also show promise for even stronger IP enforcement. China has made great strides in IP protection and over the next 10 years may lead the world in protecting patent rights as Chinese companies continue the migration from manufacturing to innovation. Chinese President Xi Jinping recently stated that IP infringers need to be punished more severely and pay a higher price. Unfortunately, the U.S. has moved in the opposite direction.
2. Evaluate your current portfolio
Take the time to remove U.S. patents that have little business value over the next 10 years. These may include patents in some software areas and business method technologies. Have your counsel audit your portfolio and examine the prosecution records to determine which patents are susceptible to an easy IPR challenge. Consider ex parte reexamination for valuable, but susceptible, patents.
3. Invest more for your key assets (not less)
Too often the reaction to losing portfolio value is to decrease investment in the portfolio. That is the wrong approach. More effort and investment need to be made to identify key assets, perform thorough prior art searches and draft applications/claims that can withstand an IPR petition. Keep a patent application family alive with very diverse claim strategies for these key assets.
4. Hire the best firms
See # 3. Now is not the time to cut budgets or look for the cheapest counsel. A better strategy is to reduce the number of patent applications filed annually and increase the budget per case filed. I used this strategy effectively in the past to hire the best available counsel. I would prefer to have 20-30% less patents in a portfolio but know that I did not cut corners in building the remaining portfolio.
5. Increase Ex parte appeals
The PTAB has been working very hard for the last 2 years to reduce the inventory of ex parte appeals. As Deputy Director my goal for the USPTO was to reach an appeal decision in 12 months (I am happy to say that the PTAB is moving closer to meeting this goal). The APJ’s who decide appeals are also the same APJ’s that decide IPR’s. Although there is no deference given to patents that issue after a successful appeal, I would prefer an indication of the PTAB’s view early in the patent life cycle – better to lose on appeal than in an IPR.
6. Pick the right IPR counsel
Is there a benefit to having litigation counsel perform an IPR trial or should prosecuting attorneys be selected? After all, both disciplines are capable of drafting high quality work product and mastering the applicable art. It is important to remember that PTAB judges are not interested in typical litigation posturing, they want an honest presentation of the art and its proposed application to the claims. As such, consider adding an independent prosecution attorney to an IPR team. A second opinion is worth it. Finally, moot the case before oral argument so that it is not a “litigation closing statement.” The judges really want to discuss technical issues at trial, not simply hear a restatement of the briefs they have studied.
Join the Discussion
12 comments so far.
David SteinAugust 22, 2017 04:37 pm
An excellent article. Thanks for the observations, Russell.
I’ve also gravitated toward pouring more time and effort into more selective patent applications. Key strategies:
1) Focusing on the point of novelty, and presenting strong technical arguments to overcome § 101 and § 102/103 rejections, and
2) Using the appeal process (including pre-appeal requests for review, and post-prosecution pilot program) to drive home the point where the rejection is materially deficient.
Too many patents are issuing with overly narrow claims – those featuring extensive limitations that recite specific variations or embodiments, just because the examiner said that that’s all he/she is willing to allow.
Earlier today, one of my clients asked me about a patent that just issued, which the patentee was touting as patents for “cloud-based VPN.” Digging into the prosecution history, I found that a 200+-word independent claim had been further amended with about 100 words of additional limitations to get the case to an allowance. I have grave doubts as to the value that such bloated claims offer… does *anyone* infringe them, to the level of scrutiny that a court would require? When the claim is bogged down with trivial design choices, it’s quite possible that even the patentee’s service differs in at least one minor detail, and does not fall within the nanoscale scope carved out by the literal metes and bounds of the patent.
I hope that the patent community generally gravitates toward more meaningful patents through more savvy and informed prosecution efforts.
The Time Is Now To ActAugust 21, 2017 12:48 pm
Russ- your point 3 is spot on. Glad you chose to write along those lines. IPRs, or not, the IP mgrs still need. to be curating value even when the right decisions are not front page news. Now is when the skilled mgrs show their mettle. And, may our lawmakers and justices see the big picture. But, thank you for writing professional ideas based on how things are today.
AnonAugust 21, 2017 12:48 pm
You take umbrage oddly – having previously admitted to the characterization that your views sound in the same views espoused by the Efficient Infringer crowd.
Further, my posts were NOT only “insult,” as I also distinguished the attempt by you to focus merely on one thing.
You protest too much, methinks.
ValuationguyAugust 21, 2017 12:11 pm
While I agree that the pendulum has swung much too far towards anti-patent….I find it particularly concerning that your article seem to specifically call out those in Congress which are trying to ACTUALLY reform the process (via the STRONG PATENT ACT) but fail to call out the main supporters of the troll narrative …especially since, in your previous position at the PTO…with the last Congress, you worked very closely with these troll-narrative pushing legislators, their staff, and the key Committee staff in effectively BLOCKING the reforms being currently pushed. You know very well that with Rep. Goodlatte and Rep. Issa controlling the key Committees in the House that nothing good for patent owners is going to get to the Floor for a vote in this Congress.
My impression of your article is that it is entirely self-serving publicity for your (or your colleagues’) services considering you are in private practice again and you are recommending further lawyering-up against what you know and seem to acknowledge here is a unfairly-tilted playing field. All six of your steps involve a corporation’s outside counsel getting more billable hours….without really addressing the fundamental problem patent owners currently face….which is the TILTED PLAYING FIELD itself. How are you recommending that patent owners change that? The best (and most connected) lawyer in the world MIGHT help…but few will ever be able to afford to hire the most connected..and even then it is a major gamble of low odds due to the stacked deck.
BennyAugust 21, 2017 11:16 am
You asked earlier why the US has slipped to number 10. I looked at a couple of previous GIPC reports, it looks like the US hasn’t moved down – the overall patent score remains 7 – but has been overtaken by other countries. I would add, for those who didn’t notice the subtlety, that this rank concerns patents only. In the overall rating, which includes patents, trademark, and copyright, the US ranks number 1.
As usual, your post contains as much disdain for other commentators as actual content, and ignores the very basic question I put forward – if the current US system which allows for patent revocation is to blame for the poor US ranking, what system replacing it (if any) would push the US higher up?
Don’t bother trying to respond if you can’t do so without hurling further insults.
AnonAugust 21, 2017 10:54 am
Your questions are like comparing apples to oranges. One of the aspects of the prior US system was the respect for property (of which, a granted patent is).
You cannot take the revocation proceedings in a vacuum without recognizing the sovereign differences in the protections afforded property.
That’s why I phrased my response to you as I did. You bring up an interesting point, but then you mistake the point for some larger view that does not hold (and that larger view ALSO happens to be the view pushed by the Efficient Infringer crowd).
As I also indicated, there are many concurrent items that have occurred to weaken what was once considered the gold standard for patent protection – in the world. Such a myopic view that you propose (one aspect alone – and that, out of context of what was prior in each sovereign) is simply NOT helpful.
BennyAugust 21, 2017 06:58 am
closer inspection would reveal that re-examination and revocation in the UK (and most other countries) begins and ends with the patent office and is conducted primarily by PTO staff who know their onions. This makes the whole process quicker, cheaper, and smarter. The UK patent law specifically states that it is in the public interest to remove from the patent register patents which have been wrongly granted and confer unfair monopoly on the holder.
So, on the assumption that the first reflex of anyone accused of infringement would be an attempt to annul the contested patent, my question was, would you be happy to replace the US system specifically with the UK system? And let me ask another one – would a third, alternative method, push the US ranking up or down the scale?
AnonAugust 21, 2017 06:41 am
Most likely not. While a fair point in contrasting with the current ranked number one country, it is – at the same time – less than a fair point because what people are upset about is WHY we have slipped to number 10.
Perhaps you should reflect (again) on comments that point out how much your posts align with those of the Efficient Infringer group, and realize that THAT (the degradation of the US patent system due to capture by that group) is the larger driver with the dissatisfaction with the evolving US system.
That way, when you have something of a valid point to share, it will not come across as being merely smarmy.
BennyAugust 21, 2017 05:46 am
An oft-repeated phrase here is that the US patent system is ranked 10th in the world. Would the writer be happy with a patent system in which the method of patent revocation is identical to that of the country ranked number 1?
DavidAugust 21, 2017 12:44 am
I disagree with your assumption.
Russ SliferAugust 20, 2017 06:28 pm
David, thanks for reading the article and commenting, but I would not count on the Supreme Court to rule that IPR’s are unconstitutional. My recommendations are based on the assumption that post grant proceedings are here to stay.
DavidAugust 20, 2017 11:49 am
IPR lawyer in Idaho advises that we pick the right IPR counsel.
Oil States Russell, Oil States.